I was checking the GCF for E2 content, and I noticed the materials folder was missing. Would this be the reason why half of the props in game are shown in wire frame?
You should try reinstalling the game.
When i try play Ep2 levels in Gmod i get see through Textures and Such, and the wonky animations, Should i re-install also?
or is that an Engine thing?
Yes you should.